When you think about passive income in a Tax-Free Savings Account (TFSA), monthly-paying real estate investment trusts (REITs) can be incredibly attractive. And if I had to choose one REIT to put my entire $7,000 TFSA contribution into today, I’d seriously consider Allied Properties REIT (TSX:AP.UN). It currently offers a monthly distribution that works out to an annualized yield of around 10.5%, and with a recovery underway in office demand and a premium portfolio, that income could be both consistent and long-lasting.
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All about Allied
Allied Properties focuses on what it calls “urban workspace,” which includes distinctive office properties in major Canadian cities like Toronto, Montreal, Vancouver, and Calgary. The REIT also owns data centres, giving it a slice of exposure to digital infrastructure. While office REITs have faced major headwinds since the pandemic, Allied has started to show clear signs of turning a corner.
In the most recent first-quarter (Q1) 2025 earnings results, Allied reported revenue of $140.5 million, up from $138.8 million the year before. Net operating income was $86.7 million, slightly ahead of last year. More importantly, same-asset net operating income rose 3.2% year-over-year, which shows the underlying property performance is improving. Funds from operations (FFO) came in at $56.1 million, with adjusted funds from operations at $51.6 million. That puts the quarterly AFFO payout ratio at around 95%, slightly high but expected to improve with stabilized occupancy and lease-up gains through 2025.
Staying strong
Allied’s strategy to maintain its distribution has included disposing of non-core assets to strengthen its balance sheet. The REIT closed $97 million in asset sales in Q1 alone and has identified more than $600 million in additional dispositions over the next year. That capital is expected to be used to pay down debt and fund improvements in key properties, reducing financial risk while increasing long-term value.
Right now, Allied units trade around $18.25. That’s well below net asset value, and below even pandemic-era lows. Yet the company maintains a monthly distribution of $0.15 per unit. Over a year, that works out to $1.80 per unit. At the current price, that’s a dividend yield of roughly 10.5%, one of the highest for any office-focused REIT in Canada.
That monthly income is paid like clockwork, which matters. A $7,000 investment would yield approximately $689 per year, or about $57.50 per month. That’s money you could reinvest, use for bills, or keep as a buffer. And with distributions paid tax-free inside a TFSA, every dollar of that cash is yours to keep.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| AP.UN | $18.25 | 383 | $1.80 | $689.40 | Monthly | $6,994.75 |
Considerations
Now, is there risk? Of course. Office properties face ongoing pressure from remote and hybrid work. Allied’s portfolio, though, is less exposed to generic downtown towers and more focused on architecturally unique, high-demand buildings that attract tech firms, media companies, and creative businesses. Occupancy remains in the mid-80% range, but leasing activity is accelerating. New tenants signed in Q1 include several media firms, post-secondary institutions, and professional service businesses. That points to growing demand in urban cores, not a slow death of office space.
Another positive signal is management’s continued insider buying. CEO Michael Emory and other executives have been adding to their personal holdings, showing confidence that Allied is undervalued and ready to rebound. With more asset sales expected and the dividend reaffirmed, the trust is working hard to reposition itself as a leaner, more focused business.
Bottom line
So, if you’re wondering how to make your $7,000 TFSA contribution work harder in 2025, Allied Properties REIT could be a bold but rewarding choice. With a 10.5% monthly-paying dividend, an improving balance sheet, and a portfolio that’s hard to replicate, it’s a dividend stock that offers both high income and a chance at long-term recovery. And in this economy, a stable cheque every month can go a long way.
